45th Week Topic: After the Red Sea Crisis Subsides

Market news on November 4, 2025: With Israel and Hamas reaching a fragile ceasefire agreement, the chairman of the Suez Canal Authority (SCA) stated that there have been initial signs of improvement in the canal's navigation conditions.

General Omar Rabie met with representatives of 20 shipping companies at the headquarters of the Authority in Ismailia, Egypt. He said that a total of 229 ships "returned" to the Suez Canal in October, which was the highest monthly figure since the attacks by the Houthi militants near Yemen on merchant ships led to a sharp drop in navigation volume. Rabie pointed out that the Sharm El Sheikh Peace Summit "had a positive impact on regional stability, prompting many ships to choose to navigate through the canal again", and particularly praised CMA CGM Shipping Group for recently dispatching two ultra-large container ships through the waterway. The online shipping data of HIFLEET fleet shows that the navigation volume of the canal from July to October increased slightly by 1.68% year-on-year, while the freight volume of the Red Sea during the same period increased more significantly by 10%, mainly due to the passage of larger-tonnage vessels.

According to the overall display of HIFLEET shipping big data, the navigation volume of the canal has not shown any substantial improvement. Most large shipping enterprises still prefer to take a detour through Africa. Taking the data of container ships traveling south via the Suez Canal as an example, the number of ships per day has remained between 3 and 5 for the past three months, occasionally reaching 8 on a single day. There is no obvious indication that container ships are returning to the Red Sea route in full. This result indicates that the container ship market, on the one hand, is to avoid the risks brought by the Houthi militants, and on the other hand, can obtain more profits by traveling a longer ton-mileage. According to the HIFLEET vessel congestion data, the average number of vessels passing through the Suez Canal per day in the past three months was approximately 20, with an average waiting time for navigation of around 20 hours, which is basically the same as the navigation data in the previous six months, and is much lower than more than twice the level before the Houthi militants launched their first attack in November 2023.

To attract shipowners to return to the Suez Canal, the Suez Canal Authority launched a discount policy earlier this year, but the effect remains controversial and not obvious. According to HIFLEET shipping big data, in the past month, 69 south bound container ships have passed through the Suez Canal, which is basically the same as the number of container ships passing through in the previous months. Large container liners have difficulty quickly adjusting their route plans, and they are also concerned about the situation in the Red Sea, which are the main reasons for their slow response to the incentive measures introduced by the Suez Canal Authority for container ships. Market shipping experts suggest that the authority should extend the incentive measures to oil tankers, bulk carriers and general cargo ships, as these types of vessels can usually adjust their navigation plans more quickly.

After the calmness of the Red Sea situation, ships will return to the Red Sea. This will have both positive and challenging impacts on the global shipping market. The core aspects are the improvement of supply chain efficiency and the reduction of logistics costs. However, shipping companies will face intensified competition and severe market fluctuations.

After the Red Sea resumed normal navigation, freight rates for goods transportation dropped significantly. The bargaining power of shipping companies weakened, and the logistics costs for shippers decreased due to the reduction in freight and fuel surcharges. The Suez Canal returned to its main route, and ships taking the Cape of Good Hope route gradually disappeared. In the short term, congestion may occur in Europe and the Suez Canal. The pressure of excess capacity in shipping capacity intensified, and the revenue of shipping companies was under pressure. The development of alternative routes such as the Arctic route was restricted.

There is uncertainty regarding the resumption of normal traffic in the Red Sea. The fundamental improvement of the security situation and the reduction of insurance costs are the key factors for shipping companies to return. High insurance costs will delay the return. In the long term, based on the current improvement in the situation in the Red Sea, major shipping companies are likely to gradually and systematically resume navigation, avoiding severe impacts on the market and ports.

The improvement in the future of shipping in the Red Sea is a positive sign for the global supply chain. However, the era of high rates for shipping companies has come to an end, and the competition among containers will become more intense.